7 myths about car insurance debunked once and for all


There are a lot of myths swirling around when it comes to car insurance. While they generally just seem like harmless old wives’ tales, they can make the truth around your cover a little murky, which isn’t ideal. To make sure you’re knowledgeable and have all the (actually true) facts, it’s time that we debunk those myths about car insurance once and for all!

Common car insurance folklores that just aren’t true

1. All insurers use the colour of your car to determine how much you pay for insurance

This is possibly one of the oldest myths in the book! The thought behind it is that more vibrant colours, like red are more expensive to insure because they are more likely to get stolen or be involved in accidents (red cars go faster, right? Nope, that’s also a myth for the record).

At AAMI, we don’t even ask you what colour your car is when you take out car insurance with us. So if that bright yellow vehicle with flames painted up the sides is calling your name, go for it!

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2. Having car insurance means you don’t pay anything in an accident

The main purpose of car insurance is to cover you financially if you’re involved in a car accident which causes damage, so you don’t have to pay the upfront cost of repairs if you’re the one at fault. However, this doesn’t quite mean you walk away from an accident without paying anything. If you lodge a claim where no one else is proven to be at fault, you’ll need to pay an excess when you claim. How much this is depends on the circumstances of the accident. For example, the excess will most likely be higher if a young or inexperienced driver is driving.

3. You’re automatically covered for windscreen and glass repairs when you buy car insurance

Many people think that buying car insurance automatically means their windscreen and glass is covered for damage, but that’s actually rarely the case. Even with Comprehensive Car Insurance, you’ll usually have to pay your normal excess for those kinds of repairs.

You can, however, often add Optional Cover to your policy, so that if something does go wrong with your windscreen, sunroof or window glass, you could be covered.

Learn about Windscreen & Window Glass Cover

4. Car insurance doesn’t cover modifications, accessories or off-road driving

Car insurance isn’t just for your regular, unmodified cars that never venture off the beaten track.

With AAMI you can take your car off-road for private or recreational use, and you can add legal modifications and accessories to your car, and it will still be covered by your policy. You’ll have to ensure that your car is insured for an ‘amount covered’ – the maximum amount that your insurer will pay for any loss or damage to your car caused by an accident – which should be adequate to cover an accessories and modifications.​

​Just keep in mind that your car has to be kept in a roadworthy condition and its modifications must adhere to road laws.

And you can't use it in a competition, or damage it further after an incident (unless you are acting to prevent further loss or damage such as driving it from a busy motorway).​ See the PDS for full details.​

5. Car insurance covers mechanical repairs and breakdowns

Many people think that breakdowns and mechanical repairs are included in their car insurance, but this is isn’t always the case. For example, general wear and tear on your vehicle isn’t covered by car insurance, and should be minimised by getting your car regularly serviced.

The same goes if you breakdown on the side of the road; AAMI Roadside Assist is an Optional Cover that you can choose to add to your policy in case you ever find yourself stranded up Ship Creek.

6. Personal belongings in your car are covered by your car insurance

If personal belongings are in your car when it’s stolen, or are damaged when your car is in an accident – they could be covered by your car insurance. AAMI offers $1,000 of after claims expenses which can be used to cover your personal items, like your telecommunications and electronic devices at the time of the incident. With AAMI Contents Insurance, you can also insure Personal Valuables for items over $1,000 to cover ‘high risk’ items like phones, laptops and tablets with Portable Valuables Cover. Similarly, if you keep tools in your car for business purposes, you can make sure they’re covered with Business Insurance.

7. Making a car insurance claim is a nightmare

Many people think that claiming on car insurance is a mammoth-sized task that will only cause more headaches. In actual fact, it’s pretty seamless, especially the way that AAMI’s sorted it.

We’ve provided a bunch of options for you to make a claim, including through the AAMI App, through AAMI Online, or by calling our friendly claims team on 13 22 44.

Learn more about claims below. 

AAMI Claims

It’s important to distinguish the truth from the myths when it comes to car insurance, so you know exactly what you are and aren’t covered for. It also means that the next time someone tries to tell you that all insurers use the colour of a car to determine how much you pay for insurance, you can irrefutably tell them they’re wrong.

See what you could save with a quick, online quote.


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Insurance is issued by AAI Limited ABN 48 005 297 807 AFSL 230859 (AAI) trading as AAMI. Any advice has been prepared without taking into account your particular objectives, financial situation or needs, so you should consider whether it is appropriate for you before acting on it. Please read the relevant Product Disclosure Statement before you make any decision regarding this product. The Target Market Determination is also available.